Regulatory Reflex Benefit... Increase in High-End Officetel Transactions

[Asia Economy Reporter Jang Hyowon] As stringent real estate regulations targeting the housing market, including apartments, continue, officetels, which are relatively less affected by these regulations, are gaining indirect benefits.

According to the ‘Monthly Building Transaction Status’ released by the Korea Real Estate Board on the 24th, a total of 161,642 officetel transactions were recorded nationwide last year, an increase of 11,764 transactions (7.85%) compared to 149,878 transactions in the same period the previous year.

In particular, transactions of officetels priced at 900 million KRW or more increased significantly. Analyzing the actual transaction price data from the Ministry of Land, Infrastructure and Transport, 582 officetel transactions priced at 900 million KRW or more were recorded nationwide last year, more than double the 278 transactions from the previous year.

By region, Seoul had the highest number with 346 transactions, followed by Busan with 124, Gyeonggi with 107, Daejeon with 3, and Gyeongnam with 2. Officetels traded in the three Gangnam districts of Seoul?Gangnam-gu, Seocho-gu, and Songpa-gu?accounted for 111 transactions, representing 19.07% of the total transactions.

Along with the increase in transaction volume, record-high prices have also emerged. According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system, the ‘Tower Palace’ located in Dogok-dong, Gangnam-gu, Seoul, with an exclusive area of 180.31㎡, was traded for 3.13 billion KRW in December last year, setting a new record price. The previous highest price for this type was 2.785 billion KRW, traded in July of the same year, marking an increase of approximately 345 million KRW in five months.

Additionally, the ‘Boutique Monaco’ located in Seocho-dong, Seocho-gu, Seoul, with an exclusive area of 178.37㎡, was traded for 2.03 billion KRW in February last year and changed hands last month for 2.65 billion KRW, an increase of 620 million KRW.

This is interpreted as an indirect benefit resulting from real estate regulations. Through the December 16, 2019 real estate measures, the government completely banned mortgage loans for apartments priced at 1.5 billion KRW or more and tightened loan regulations by limiting the loan-to-value ratio to 20% for apartments exceeding 900 million KRW. These measures have intensified the demand shift toward officetels, which are relatively free from loan restrictions.

A real estate expert said, “Since the current government took office, a series of high-intensity real estate measures targeting apartments have been announced to stabilize the housing market, invigorating the alternative housing facility sales market such as officetels,” adding, “Especially for officetels priced at 900 million KRW or more, they are popular because loans are easier to obtain compared to apartments and they are relatively less affected by various regulations.”

Meanwhile, luxury officetel sales are active in the Gangnam area.

Sangji Kyleum plans to launch ‘Sangji Kyleum M’ next month in Nonhyeon-dong, Gangnam-gu, Seoul. It is the first small officetel applying the luxury residential brand ‘Kyleum,’ consisting of 88 units with exclusive areas ranging from 51 to 77㎡. To ensure a sense of openness, ceiling heights of up to 3 meters have been designed, and a two-sided window design (excluding some types) allows residents to enjoy the wide-open city views of Gangnam.

In addition, numerous amenity spaces including a private lounge exclusively for residents will be created, and valet parking services will be provided free of charge to residents. Furthermore, in partnership with HDC iControls, various specialized services such as smart home networks and IoT services will be introduced.

Meanwhile, the model house will be located in Dosan-daero, Gangnam-gu, Seoul.

This content was produced with the assistance of AI translation services.